Hainan Air profits soar on strong passenger growth

PUBLISHED : Saturday, 01 September, 2007, 12:00am
UPDATED : Saturday, 01 September, 2007, 12:00am
 

Profits at Hainan Airlines, the fourth-largest mainland carrier, rose more than 800 per cent in the first half on strong passenger growth and one-time gains from contracting out some of its pilots to related airlines.


Net profit of the Haikou-based airline rose to 189.7 million yuan from 20.8 million yuan a year earlier. Stripping out exceptional gains of 126.8 million yuan from contracting out pilots and other non-operational income, fundamental earnings increased about 270 per cent to 77 million yuan.


Sales from scheduled passenger, cargo and charter flights expanded 13 per cent to 6.5 billion yuan on an increase in passenger numbers of more than 20 per cent. The carrier flew 7.5 million passengers in the first half and generated sales of 5.5 billion yuan.


Revenue on flights originating from Hainan, known as the Hawaii of the East, increased 51 per cent to four billion yuan.


But sales in Beijing, Shaanxi and Taiyuan decreased between 10 per cent and 53 per cent. The airline had diverted planes from these routes to help expand fledgling subsidiaries Hong Kong Airlines and Grand China Express Airlines.


The airline, partially owned by US investor George Soros, sold new shares to raise 5.6 billion yuan to fund fleet expansion in September last year.


Its shares closed at 10.52 yuan in Shanghai yesterday, up 7.6 per cent.


Separately, Shanghai Airlines and Xiamen Airlines said they would expand their fleets, signing new orders with Airbus and Boeing. The move comes at a time when the civil aviation regulator warned of potential overheating in the industry.


The General Administration of Civil Aviation imposed some austerity measures last month, such as reducing flights to the Beijing Capital Airport and suspending new airlines application until 2010.


The number of daily flights to the capital was slashed to 1,050 last month from 1,100 and will be cut further to 1,000 by March next year.


The measure is designed to ease the congestion at the overloaded airport and keep clean the safety record of the civil aviation industry. Mainland carriers have accumulated flying hours of more than 800,000 without an accident.


Shanghai Airlines agreed yesterday to buy five single-aisle A321s for a total listed price of US$370 million. The aircraft will be delivered in 2011 and 2012. The orders are in addition to a previous contract for five A321s.


Shanghai Airlines plans on expanding its existing network. In buying the same kind of aircraft, it expects to lower operating and maintenance costs per plane.


Shares of Shanghai Airlines closed at a record high of 13.93 yuan in Shanghai, after rising the daily limit of 10 per cent. This was despite the company reporting first-half losses of 134.5 million yuan yesterday.


Xiamen Airlines also ordered 25 Boeing 737-800s, after its parent, China Southern Airlines, contracted 55 next generations Boeing 737s last Monday. The combined catalogue prices for the B737-800s amounted to US$1.9 billion, according to a media release from Boeing yesterday.


Soaraway


Shareholding in other airlines (%)


Shanxi Airlines 92.51


Changan Airlines 73.51


China Xinhua Airlines 60


Lucky Air 48.9


Deer Jet 48.9


Shilin Airlines 48.9


Yangtze River Express 45


Hong Kong Airlines 45


Hong Kong Express 45


Grand China Express Air


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